Many teachers go into the profession, despite the relatively low wages, with the expectation that they will be taken care of in retirement through their pension. But in many places, that promise isn’t being met.
In several states, retired teachers and other state workers haven’t gotten a cost-of-living adjustment to their pension checks in years. And with the cost of health care continuing to rise, retirees say they’re reaching a breaking point.
Mary Brancich taught elementary students for nearly 30 years in rural Oklahoma before retiring in 2007. While she didn’t make a lot of money as a teacher, she thought retirement would be secure.
But she has never received a meaningful adjustment to her pension check, she said. Brancich, age 73, works at a nonprofit in order to pay for her prescriptions, and sometimes she still has to decide which medications she can do without because she can’t afford them all.
“I didn’t think at this age I would still have to be working to make ends meet,” she said. “I thought I’d be more comfortable, be able to travel a little, help my kids and grandkids — I’m not able to do that.”
Across the country, low teacher pay has sparked public outcry, walkouts, and even campaign promises from presidential candidates. But long after teachers leave the classroom, stagnant wages can still hurt.
The typical teacher pension plan promises a payment upon retirement that is determined by a formula that includes years taught and final salary, rather than by investment returns like in the private sector. More than half of states’ pension plans give retirees an automatic raise to keep pace with inflation.
“The reason that states have built in a cost-of-living adjustment is so that the value of the pension doesn’t wear away over time, so a teacher’s standard of living hopefully won’t have to change substantially in retirement,” said Chad Aldeman, a principal at the education nonprofit Bellwether Education Partners who researches teachers’ pensions plans.
But about a dozen states require the state legislature to approve a cost-of-living adjustment, and in many of those states, lawmakers have frozen benefit increases for years due to increased budgetary pressures and strains on pension plans. Also, about 40 percent of public school teachers are not covered under Social Security because of state policies—making pension payments critical in retirement.
A push to increase benefits
This spring, advocates have pushed for either a cost-of-living adjustment, or COLA, to monthly pension payments or “13th checks” that come as a one-time bonus payment in states that require legislative approval.
“There’s a misconception that because you have a pension, things are easier for you,” said Bridget Early, the executive director of the National Public Pension Coalition, which advocates to protect pension plans. “But we’re talking about a group of people who have always worked for a lesser amount of money than they would in the private sector. … It’s not like they’re getting rich off their pension. They’re seniors who are trying to survive with the spiking cost of health care.”
Many states offer retired teachers health insurance, but those are subject to legislative changes and state budget constraints. In Texas, state officials enacted higher deductibles and premiums in 2017, leaving many retirees struggling to meet those costs on their pension payments.
Chris Ardis said she wouldn’t have retired at age 52, after teaching in Texas for nearly three decades, if she had known her health care costs would increase so significantly.
“You spend your whole career thinking, ‘I’m not making what I would in the private sector,’ … but I taught with the promise [of a pension],” Ardis said through tears. “To think of my colleagues, even the ones I’ve never met, struggling — it’s very painful.”
‘They’re throwing us bones’
Lawmakers say they want to provide COLAs to retirees. But often, states’ pension systems already have large unfunded liabilities—meaning the amount owed to retirees is growing faster than the assets that pay for those obligations.
“Every time [legislators] vote to provide a COLA, they’re voting to boost the benefits of retirees, and they’re boosting the unfunded liabilities as well,” Aldeman said.
In Oklahoma, the push to add a 2 percent cost-of-living adjustment for retirees failed in the state legislature this month. Instead, lawmakers are pursuing an analysis that will determine how much a COLA would cost the state and how it would affect the pension fund. The study is slated to be complete before Dec. 1, and legislators could pick up the issue next year.
Still, Oklahoma retired educators have gone 11 years without a cost-of-living adjustment, and not receiving an increase this year was a blow, said Sabra Tucker, the executive director of the Oklahoma Retired Educators Association. (Each state has an independent nonpartisan group that advocates for the well-being of retired educators.)
Tucker recently heard from a retiree who had taught in Oklahoma for 40 years and had to wear her coat in the house this winter to save on heating bills. “Our oldest retirees of course have the smallest pensions, and when you don’t adjust for inflation, that buying power quickly disappears,” she said.
In Texas, lawmakers are planning to give retired educators a one-time 13th check for the first time in more than a decade. The state Senate voted to give retirees a $500 check and shore up the pension fund by increasing contributions from the state, current teachers, and school districts. The state House, however, voted to increase only the state’s contribution to the pension fund and give retirees up to $2,400. The two chambers must now agree on a compromise—but both proposals would make the state’s pension system actuarially sound, meaning it would be fully funded within 31 years.
This would be the first 13th check retirees have received since 2007. Teachers who retired after Sept. 1, 2004 have never seen a cost-of-living increase to their pension plan.
“While I do not care to sound ungrateful, I feel like they’re throwing us bones,” said Ardis, who retired six years ago and now does freelance work and has an education blog.
This year, she went to three necessary doctor’s appointments, including a mammogram, but she couldn’t afford to go to the doctor for a physical exam or other routine illnesses. With the three appointments, she had to pay $1,200 out of pocket.
Tim Lee, the executive director of the Texas Retired Teachers Association, said members would prefer to receive steady cost-of-living adjustments rather than a one-time check. (Still, the association and retirees support the House’s proposal of a $2,400 check.)
“They’re not a gift, it’s not an entitlement, it’s really deferred compensation,” he said.
Instead, Lee said, retirees are facing years of inflationary pressures on their pension benefits—a situation he worries will hurt recruitment and retention in the state.
“It feels like it’s a never-ending battle to make ends meet after you’ve been in a classroom in Texas,” he said. “I think you’re going to see more and more people potentially leaving [the profession]. It’s not worth the risk of their own livelihoods in their golden years.”
An ongoing debate
States should consider tying cost-of-living adjustments to the consumer price index, said Aldeman, the pension plan researcher. That way, benefits will rise with inflation, and not more than that—preventing costs from getting too high while still letting retirees budget accordingly.
For the states where lawmakers must vote on a cost-of-living increase, “they’re going to be having the same debate next year,” he said.
In Indiana, for example, the pension benefits have fluctuated over the years at the legislature’s discretion. Retired teachers have received a bonus check in lieu of a COLA every year since 2009.
This budget cycle, lawmakers considered freezing retired teachers’ 13th checks for two years. Ultimately, the final budget passed by the legislature this week did include a 13th check for retirees.
But the constant uncertainty of whether retired educators will receive a bonus check or, ideally, a COLA, is stressful, said Tom Mellish, the executive director of the Indiana Retired Teachers Association.
“We have to go beg basically every budget year for it, … just to maintain what we’ve got,” he said. “[Retirees] feel like they’re being disrespected or just forgotten about.”
Mellish said there are 12,000 educators across the state who receive less than $1,000 a month in pension benefits. While Indiana teachers do receive Social Security, it can still be difficult to make ends meet, he said.
Mellish has heard of retired teachers who are doing without necessary hearing aids, or who do limited dental work—“just enough to keep the pain away”—because they can’t afford full procedures.
Retired teachers “were hoping to have not a rich retirement, but a dignified one,” he said. “But if you’re sitting there in subsidized housing and not getting dental or health care needs taken care of, it’s hard to think they’re being respected for the work they’ve done.”